Serbia, Republic of

The Republic of Serbia, a European Union (EU) membership candidate country, introduced new legislation in 2019 to enhance the accounting, auditing, and financial reporting requirements in Serbia to be in line with the relevant EU Directives.

Accounting Framework

The Law on Accounting of 2019 stipulates the requirements for the preparation of financial statements, including applicable accounting standards and financial reporting thresholds. In accordance with the law, the Ministry of Finance is responsible for enacting financial reporting standards in the Republic of Serbia and has adopted IFRS and IFRS for SMEs as issued by the IASB and translated into Serbian.

The Law mandates the use of IFRS for the preparation of separate and consolidated financial statements for: large entities; public interest entities (PIEs) as specified in the Accounting Law or legal entities categorized as PIEs by the government regardless of the entity’s size; and public companies established under the Capital Markets Law. Large entities are defined as meeting two of three size criteria, namely: average value of total assets greater than €17.5 million; operating income greater than €35 million; and average number of employees greater than 250.

Small and medium-sized entities are required to use IFRS for SMEs, although medium-sized entities may elect to apply IFRS. To be categorized as small, an entity must meet two of the following three criteria: average total assets valued at between €350,000 and €4.4 million; operating income between €700,000 and €8.8 million; and average number of employees between 10 and 50. Medium-sized entities are defined as meeting two of the following three criteria: average total assets valued at between €4.4 million and €17.5 million; operating income between €8.8 million and €35 million; and average number of employees between 50 and 250.

Micro entities may apply IFRS for SMEs or the requirements in the National Rulebook for Accounting and Financial Reporting for the preparation of statutory financial statements. Micro entities are those which meet two of the three following criteria: average total assets of less than €350,000; operating income of less than €700,000; and average number of employees of less than 10.

Auditing Framework

The Law on Auditing of 2019 upholds the audit requirements of the Law on Accounting and Auditing of 2006 and 2013, defines the scope of the entities subject to mandatory audit requirements, and establishes the Audit Public Oversight Board of Serbia.

Under the Law on Auditing, all large and medium-sized entities, financial institutions, public entities established under the Capital Markets Law, and sole proprietors that generate income more than €4.4 million in the previous financial year must have an audit of the financial statements conducted.

Mandatory membership in the Chamber of Authorized Auditors of Serbia is required of all statutory auditors and audit firms, and auditor (not audit firm) rotation after seven consecutive years. Audits must be conducted in accordance with ISA as issued by the IAASB, translated into Serbian, and promulgated by the Ministry of Finance.

Only auditors are regulated in Serbia at the state level under the Law on Auditing of 2013, as amended in 2019. The profession is regulated by the Chamber of Authorized Auditors of Serbia (KoR) under oversight of the Ministry of Finance (MoF) and the Audit Public Oversight Board (APOB).

To practice as an auditor, an individual must obtain a bachelor’s degree, three years of work experience in an audit firm, complete a professional educational program administered by the KoR, pass KoR’s examination, and obtain a license form the MoF. Membership in KoR is mandatory for all practicing auditors.

Under the Law, KoR is responsible for maintaining registers of certified statutory auditors, audit firms and independent auditors; organizing and implementing a quality assurance (QA) review system; arranging and delivering the continuous professional development program for statutory auditors along with other authorized providers; managing and conducting professional examinations for the certification of auditors; and monitoring compliance with the Code of Ethics. The MoF, APOB, and KoR share responsibility for the system of investigation and discipline of auditors.

APOB was established in 2013 under the Law on Auditing of 2013 with a mandate to oversee the KoR, audit firms, independent advisers, and licensed certified auditors. Specifically, the APOB oversees professional examination arrangements for certification of auditors; establishment and implementation of continuous professional development for auditors; the granting of, renewal and withdrawal of licenses for statutory auditors and audit firms; application of ethical and professional standards; the quality assurance review system; and the implementation of the investigative and disciplinary system.

Further, effective 2020 under the Law on Auditing 2019, the Securities Exchange Commission is responsible for the implementation of a quality assurance (QA) review system for the performance of statutory audits of financial statements by audit firms. The SEC also reviews KoR’s QA review findings.

Accountancy professionals may also choose to join the Serbian Association of Accountant and Auditors (SAAA) and be subject to its regulation. The SAAA is comprised both of accountants and auditors. It regulates its members by requiring adherence to the Code of Ethics issued by the IESBA; developing and delivering professional trainings, examination, and certification as well as continuous professional development programs; monitoring members’ performance through a QA review system; and enforcing adherence to professional standards. The SAAA offers qualifications of Accountant, Certified Accountant, and Certified Public Accountant. The programs benefit from mutual recognition with other professional bodies in the region as well as exemptions from the Association of Chartered Certified Accountants (ACCA)’s program.

The Audit Public Oversight Board (APOB), established in 2013 under the Law on Auditing of 2013, has responsibility for the supervision of the activities of the Chamber of Authorized Auditors of Serbia, audit firms, independent advisers, and licensed certified auditors.

The main functions of the APOB are to oversee: the professional examination arrangements for certification of auditors; the establishment and implementation of continuous professional development for auditors; the granting, renewal, and withdrawal of licenses for statutory auditors and audit firms; the application of ethical and professional standards; the quality assurance review system; and the implementation of the investigative and disciplinary system. The APOB is not a member of International Forum of Independent Audit Regulators.

The Chamber of Authorized Auditors of Serbia (KoR)

The KoR was established in 2006 under the Law on Accounting and Auditing of 2006 as a mandatory membership organization for certified auditors, certified internal auditors, and audit firms subject to oversight by the Ministry of Finance. In accordance with the 2006 Law (and subsequent amendments), the chamber’s main objectives are to improve and develop the accounting and auditing profession, implement international accounting, auditing, and ethical standards, represent and advocate on behalf of the profession, and administer professional examinations for auditors. With the promulgation of the Law on Auditing of 2013, all licensed auditors as well as audit firms are required to be members of the chamber. In addition, the KoR’s responsibilities were expanded to include administration and delivery of the continuous professional development program for auditors along with other authorized providers, and implementation of a mandatory quality assurance review system for the audits of financial statements in Serbia. KoR is an Associate of IFAC.

The Serbian Association of Accountants and Auditors (SAAA)

The SAAA was established in 1955 and is comprised mainly of accountants and some auditors, who join the association on a voluntary basis. It has played a key role in the provision of Serbian translations of international standards such as IFRS, IFRS for SMEs, ISA, IPSAS, and the IESBA Code of Ethics for Professional Accountants. The main objectives of the association are to develop and strengthen the role of the accounting profession in Serbia; promote ethical behavior and adherence by its members to the IESBA Code of Ethics; develop and deliver professional training, examination, certification as well as continuous professional development programs for its members in accordance with IES; monitor its members performance, conduct and adherence to professional standards; represent members of the Serbian accounting profession globally; and promote cooperation between national PAOs.

SAAA is a Full Member of IFAC and Accountancy Europe.

In accordance with the Law on Auditing of 2019, audit firms are obliged to established and maintain a quality control system that is in line with ISQC 1. Effective 2020, the Security Exchange Commission (SEC) is responsible for the implementation of a quality assurance (QA) review system for the performance of statutory audits of financial statements by audit firms. Audit firms providing services to public interest entities are subject to a three-year visit cycle; other audit firms are reviewed every six years.

The Chamber of Authorized Auditors of Serbia (KoR) is also still tasked by law with carrying out QA reviews for its members—which include all auditors and audit firms in the jurisdiction. The QA review system operated by the KoR is subject to oversight of the SEC, the Audit Public Oversight Board (APOB), and Ministry of Finance (MoF). The MoF has final authority to approve QA review reports prepared by KoR inspectors, which are submitted to APOB for review and approval and then forwarded by the APOB to the MoF. Based on proposals put forth by the KoR and cleared by the APOB, the MoF reviews and issues a decree for appropriate corrective and disciplinary measures. The SEC also reviews KoR’s QA review findings.

The KoR reports that both established QA review system comply with the SMO 1 requirements; however, ISQM 1, 2 and ISA 220 (revised) are not legally adopted yet in the jurisdiction.

Current Status: Partially Adopted

The initial professional development and continuing professional development (CPD) requirements are established only for auditors in the Law on Auditing of 2019 and are implemented by universities and the Chamber of Authorized Auditors of Serbia (KoR) under the oversight of the Audit Public Oversight Board and Ministry of Finance (MoF).

To practice as an auditor, an individual must obtain a bachelor’s degree, three years of work experience in an audit firm, complete the professional educational program administered by the KoR, pass KoR’s examination, obtain a license form the MoF, and fulfill mandatory CPD requirements.

Universities are responsible for the defining the university accounting education curricula, which, according to the World Bank 2017 Accountancy Education: Benchmarking Study, scores well against the 2015 IES.

KoR administers a professional educational program, conducts examinations of prospective auditors, and offers a CPD program. KoR reports that it updated its curriculum and examinations in 2020 taking into consideration the IES requirements. The CPD requirements are in line with IES 7’s input-based approach of 120 hours over 3 years.

The Serbian Association of Accountants and Auditors, which unites accountants and auditors on a voluntary basis, offers qualifications of Accountant, Certified Accountant, and Certified Public Accountant based on ACCA’s qualifications and has established the requirements for a final assessment, practical experience, and continuing professional development for its members. According to the World Bank, the Certified Public Accountant program is fully aligned with the revised 2015 IES requirements, while the Certified Accountant program could be improved in areas such as governance, risk, ethics, and corporate reporting. The CPD requirements are in line with IES 7’s input-based approach of 120 hours over 3 years.

Overall, it seems that requirements of the 2015 revised IES are in place for both auditors and accountants; however, further information on the adoption of IES effective as of January 2021 (IES 2, 3, 4, and 8) is needed.

Current Status: Partially Adopted

The Law on Auditing of 2019 requires application of ISA for the performance of audits in Serbia as translated into Serbian and promulgated by the Ministry of Finance. As of 2023, the 2016-2017 IAASB Handbook has been promulgated by the Ministry. The Serbian Association of Accountants and Auditors (SAAA) is responsible for the translation of audit standards in line with IFAC’s Translation Policy. To date, it is not clear if translation has begun for the most recent version of the IAASB Handbook although in practice, the Chamber of Authorized Auditors of Serbia (KoR) reports that audits of public interest entities, at a minimum, apply the latest version of the standards.

Current Status: Partially Adopted

The Law on Auditing of 2019 requires auditors to abide by a Code of Ethics as adopted by the Chamber of Authorized Auditors of Serbia (KoR). The KoR adopted, without modification, the IESBA Code.

Auditors and members of the Serbian Association of Accountants and Auditors (SAAA), which unites accountants and auditors on a voluntary basis, are subject to ethical requirements.

SAAA translates the IESBA Code and as of 2023 has translated the 2018 version of the Code, which is being applied in the jurisdiction by members of both PAOs.

Current Status: Partially Adopted

The Serbian Association of Accountants and Auditors (SAAA) reports that cash-basis IPSAS was adopted in Serbia in 2003 through Government Decision on Adoption (49/2010) and that the Ministry of Finance is in the process of transition to accrual–based IPSAS by 2030. Cash-basis IPSAS will be applied by public sector entities as of January 2023. This is also reflected in the 2020 IFAC/CIPFA Public Sector Financial Accountability Index; the World Bank/CFRR’s 2020 Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries: Serbia; and the World Bank/CFRR’s 2022 Book on Public Sector Accounting Reforms Implementation Status in PULSAR Countries.

Current Status: Partially Adopted

Under the Law on Auditing of 2019, investigation, and discipline (I&D) of auditors, the only formally regulated category of professional accountants, is performed by the Chamber of Authorized Auditors of Serbia (KoR), the Ministry of Finance (MoF), and the Audit Public Oversight Board (APOB). The law requires KoR to inform the APOB, the MoF, Police, Public Prosecutor, and the Ministry of Justice about involvement of its members in crimes and offenses. Under the amended legislation, KoR has established an Investigation & Discipline Committee which carries out investigations and makes disciplinary recommendations to the Council to approve. The MoF has final authority to impose corrective and disciplinary measures on licensed certified auditors and audit firms. KoR reports that only members of KoR serve on the committees, which does not meet the SMO 6 best practice of including non-professionals as well.

Accountants are self-regulated through voluntary membership in the Serbian Association of Accountants and Auditors (SAAA), which reports that it has incorporated the SMO 6 requirements in the I&D system it operates to address non-compliance by its member with applicable laws, regulations, and the Code of Ethics.

Current Status: Partially Adopted

The Ministry of Finance (MoF) is responsible for the adoption and promulgation of accounting standards in the Republic of Serbia in accordance with the Law on Accounting 2019.

The MoF adopted IFRS as translated into Serbian for the preparation of the financial statements of large companies and Public Interest Entities as defined in the Law on Accounting. It also adopted IFRS for SMEs for application by small- and medium-sized entities and grants medium-sized entities the option to use IFRS. Micro entities may choose to use IFRS for SMEs or the requirements in the National Rulebook for Accounting and Financial Reporting, which the MoF is in the process of redrafting. IFRS and IFRS for SMEs become effective upon their publication in the Official Gazette.

The 2019 version of IFRS and the 2015 version of IFRS for SMEs have been translated into Serbian by the Serbian Association of Accountants and Auditors (SAAA), although the MoF is legally responsible for this. The SAAA reports that it has not yet translated and published subsequent editions of IFRS.

Current Status: Partially Adopted

Relevant Organizations

• Chamber of Authorized Auditors of Serbia (KoR)
• Republic of Serbia Ministry of Finance (MoF)
• Republic of Serbia Securities Commission: Audit Public Oversight Board (APOB)
• Serbian Association of Accountants and Auditors (SAAA)

Relevant Legislation

• Law on Accounting, 2013 (in Serbian)
• Law on Auditing, 2013 (in Serbian)
• Law on Accounting 2019
• Law on Banks, 2005
• Law on Capital Markets, 2011

Relevant Publications

• Accountancy Europe, Overview of the Profession in Serbia, July 2020.
• Borgonovo, A., Serbia - Serbia Technical Assistance to Reform Corporate Financial Reporting: P154862 - Implementation Status Results Report: Sequence 01. Washington, D.C.: World Bank Group, 2017. 
• Deloitte, “New Law on Accounting”, Oct 2019.
• Global Accountancy Development Institute (GADI), GAE Serbia 2012, 2012.
• IFAC/CIPFA, Public Sector Financial Accountability Index, 2020.
• IFRS Foundation, “IFRS Application Around the World, Jurisdictional Profile: Serbia,” February 2017.
• KoR, Organizational Profile & SMO Action Plan, 2021.
• Ministry of Finance and Economy, “Latest Developments in Audit Regulation in Serbia,” May 2013.
• Ministry of Finance of Republic of Serbia, “Experience and Challenges in Implementation of the Acquis Communautaire’s Accounting Requirement,” April 2014.
• SAAA, Organizational Profile & SMO Action Plan, 2021.
• TPA Horwath, “Adoption of Two New Laws: Law on Accounting and Auditing and Law on Auditing,” July 2013.
• World Bank, Accountancy Education: Benchmarking Study, 2017.
• World Bank, Accountancy Education: A Collection of Good Practices, 2017.
• World Bank, Serbia: Report on the Observance of Standards and Codes (ROSC), Accounting & Auditing, 2015.
• World Bank, Stocktaking of Public Sector Accounting and Reporting Environment in PULSAR Beneficiary Countries: Serbia, 2020.
• World Bank, Book on Public Sector Accounting Reforms Implementation Status in PULSAR Countries, 2022.